The analysis and allocation of risks in public private partnerships in infrastructure projects in Nigeria

TLDR

Governments worldwide, especially in developing countries with limited capital, are increasingly turning to public‑private partnerships (PPPs) to meet infrastructure demands, but understanding PPP risks throughout the project life cycle is essential for long‑term success, particularly in early‑stage contexts like Nigeria. The study surveys Nigerian construction professionals to assess their perceptions of PPP risk importance and preferred risk allocation between public and private partners. The authors identified 61 PPP risk factors from literature, classified them as exogenous or endogenous, and surveyed Nigerian construction professionals to gauge their perceived importance and allocation preferences. The survey found that the top three PPP risks in Nigeria are unstable government, inadequate PPP experience, and financing availability, and that most endogenous risks should be borne by the private partner, while political and site‑acquisition risks remain with the public sector and relationship‑based risks should be shared.

Abstract

Governments throughout the world are being forced to review how to fund the increasing demand and rising expectations of their citizens. This is especially relevant for developing countries, which often have limited capital resources to meet the soaring needs for essential infrastructure. This has consequently led to increased involvement of the private sector in the provision of public services, using various forms of Public‐Private Partnerships (PPPs). It is, however, important for both the public and private sectors to understand the various risks associated with PPPs throughout the whole life cycle of the projects in order to guarantee long‐term success. This is especially true in Nigeria and other countries where the use of PPPs are still in the early stages of development. Sixty‐one PPP risk factors were identified from literature and classified into exogenous and endogenous risks. This paper presents the results of the questionnaire survey that investigated the perception of Nigerian construction professionals on the relative importance of the identified risks and their preferences of allocation between the public and private sectors. The results show that the three most important PPP risk factors in Nigeria are “unstable government”, “inadequate experience in PPP” and “availability of finnance”. The respondents’ risk allocation preferences show that while most of the endogenous risk factors could be assigned to the private sector partner, the public sector should retain political and site acquisition risks, while relation‐ship‐based risks should be shared between the private and public sector partners